Coronavirus Update: HUD, FHFA Suspend Foreclosures/Evictions; MBA, Trade Groups Urge ‘Comprehensive’ Response from Congress
FHFA, HUD Suspend Foreclosures/Evictions for 60 Days
HUD and the Federal Housing Finance Agency yesterday announced they would suspend foreclosures and evictions for Fannie Mae, Freddie Mac and FHA mortgages for at least the next 60 days amid the coronavirus pandemic.
The FHFA foreclosure and eviction suspension applies to homeowners with a government-sponsored enterprise-backed single-family mortgage; HUD said the suspension applies to FHA-backed mortgages.
“This foreclosure and eviction suspension allows homeowners with an Enterprise-backed mortgage to stay in their homes during this national emergency,” said FHFA Director Mark Calabria. “As a reminder, borrowers affected by the coronavirus who are having difficulty paying their mortgage, should reach out to their mortgage servicers as soon as possible. The Enterprises are working with mortgage servicers to ensure that borrowers facing hardship because of the coronavirus can get assistance.”
Earlier this month, FHFA announced Fannie Mae and Freddie Mac would provide payment forbearance to borrowers impacted by the coronavirus, allowing for a mortgage payment to be suspended for up to 12 months due to hardship caused by the coronavirus.
“The servicer should evaluate the borrower for a forbearance plan or other workout assistance in accordance with our existing requirements,” FHFA said. “We also want to remind servicers that they must have a business continuity plan in place to support their ongoing ability to conduct business operations in the event of an interruption to business operations and processes.”
The FHA Single-Family Housing Policy Handbook 4000.1 Section III.A.2 describes steps mortgagees can take to offer services to borrowers who are experiencing distressed conditions that prevent them from making mortgage payments and going into foreclosure.
“Today’s actions will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns,” said HUD Secretary Ben Carson. “The health and safety of the American people is of the utmost importance to the Department, and the halting of all foreclosure actions and evictions for the next 60 days will provide homeowners with some peace of mind during these trying times.”
The guidance issued under Mortgagee Letter 2020-04 (https://www.hud.gov/sites/dfiles/OCHCO/documents/20-04hsgml.pdf) applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, and directs mortgage servicers to:
- Halt all new foreclosure actions and suspend all foreclosure actions currently in process; and
- Cease all evictions of persons from FHA-insured single-family properties.
“This is an uncertain time for many Americans, particularly those who could experience a loss of income. As such, we want to provide FHA borrower households with some immediate relief given the current circumstances,” said Federal Housing Commissioner Brian Montgomery. “Our actions today make it clear where the priority needs to be.”
FHA continues to encourage servicers to offer its suite of loss mitigation options to distressed borrowers – including those that could be impacted by the Coronavirus – to help prevent them from going into foreclosure. These include short and long-term forbearance options, mortgage modifications, and other mortgage payment relief options available based on the borrower’s individual circumstances.
The FHFA announcement is available at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Suspends-Foreclosures-and-Evictions-for-Enterprise-Backed-Mortgages.aspx.
MBA/Trade Groups Urge Congress to Make ‘Comprehensive Response’ to Coronavirus Fallout
The Mortgage Bankers Association joined more than 100 other industry trade groups in a March 18 letter to Senate and House leaders, urging Congress to take appropriate steps to provide a coordinated and comprehensive response to businesses dealing with fallout from the coronavirus pandemic.
“As America confronts COVID-19, it is critical that any fiscal and economic response to help businesses survive the crisis match the scale and intensity of the steps being taken to end the pandemic,” the letter said.
The letter noted the operations of millions of businesses are threatened, together with the jobs of the millions of workers they employ, including individual and family owned companies that operate on cash flow, which has been severely disrupted in recent weeks.
“The public response to the pandemic should be over in a few months, but the negative effects of lost jobs and closed businesses will be with us for much longer,” the letter said. To minimize the number of businesses closed and workers unemployed, the response from Washington needs to be “coordinated, massive and focused on ensuring that all businesses have the resources necessary to ride out the pandemic.”
The letter offers several recommendations to congressional action, including:
–Immediately provide readily accessible, unsecured credit to businesses of all sizes to ensure they have the cash to pay their workers, rent and other costs during this crisis.
–Suspend filing of business returns and the payment of all business taxes to the federal government for the duration of the pandemic.
–Amend the Tax Code to, among other items, restore the ability of businesses to carryback any net operating losses against previous year tax payments; suspend the application of the Section 163(j) limitation on interest expense deductions for tax year 2020 to avoid penalizing businesses for borrowing during this crisis; and suspend the Section 461(l) loss limitation on pass-through businesses to allow the owners of pass-through businesses to fully deduct any losses they incur this year.
“The key to helping businesses survive this crisis is to reduce their costs and increase their cash flow as much as possible in the coming weeks,” the letter said. “The policies above are designed to do that and ensure that businesses are not penalized by the Tax Code if they lose money or increase their debt levels in 2020.”
MBA Statement on Response to Impact of Coronavirus
MBA President and CEO Bob Broeksmit, CMB, issued the following statement this week regarding response to the ongoing spread and impact of the coronavirus (COVID-19):
“MBA commends the recent actions and ongoing efforts taken by the administration, Federal Reserve and Congress to help both consumers and businesses during this difficult time. The industry can be most helpful to many homeowners by more efficiently refinancing their mortgages, thereby reducing their monthly payments. This can be an important component of the economic stimulus, and we are working to remove hurdles that could impede that.
“The mortgage finance industry is also highly focused on efforts to streamline policies and procedures that will allow lenders to assist borrowers experiencing hardships through this current situation by providing forbearance relief, suppressing negative credit reporting, and other assistance.
“To enable the industry to deliver both economic stimulus and hardship relief, a number of issues need to be addressed – including streamlined appraisal processes, potential liquidity backstops for servicers, increased adoption of remote online notarization, and solving for title insurance issues given the growing number of county recorder office closings. To achieve this, we are working with a broad range of stakeholders, including regulatory agencies and the GSEs, to help mitigate economic impacts as Americans are encouraged to limit their social interactions.
“MBA looks forward to continuing to work with policymakers and all other stakeholders toward helping everyone get through the worst of this challenging situation.”
MBA Member Letter
Mortgage Bankers Association President and CEO Robert Broeksmit, CMB, issued an updated Member Letter on Mar. 16, the text of which appears below:
We are continuing to monitor the ongoing situation regarding the spread and impact of the coronavirus (COVID-19). MBA recognizes the gravity of this moment and the ensuing actions that have already been taken by federal, state, and local governments.
Given the ever-evolving nature of the response to this virus, we are committed to providing you with updated information of importance to your business. We have created a resource page with links to documents and guidance from the GSEs and federal and state regulators, which can be viewed by clicking here.
The mortgage industry can best support the economy and unleash billions of dollars of fiscal stimulus by helping Americans refinance to a lower rate, thereby freeing up resources for them to spend on other needs. There are unnecessary obstacles to achieving this, which we are working to remove.
There will also be many homeowners who will need immediate assistance in paying their mortgage over the next few months. We stand ready to help, but the immediate financing needs of advancing these missed mortgage payments to investors will likely be larger than the private sector alone can handle, and we will need public support to get us through the worst of the crisis.
To these ends, we are working closely with policymakers and stakeholders on a variety of issues affecting you, your customers, and the real estate market, including but not limited to:
- Borrower relief – forbearance logistics and highlighting for officials the need for consistency in policies among the GSEs/FHA/VA/USDA, including how servicers will report information to credit reporting agencies.
- Potential liquidity backstops for servicers who will undoubtedly be faced with having to advance payments on behalf of borrowers who are receiving forbearance.
- Bank regulatory flexibility for lenders providing warehouse lines and other secured financing to lenders and servicers.
- Possible relief for margin calls on pipelines and financed MSRs, particularly with quarter-end looming.
- Streamlining the rate/term refinance process – encouraging property inspection waivers for GSE-to-GSE refinances where Fannie and Freddie already hold the risk. Also looking at relief from some pre-funding re-verifications of employment, given the large number of employers (like entire state education agencies) that are closed.
- How to solve for title insurance issues given the growing number of county recorder office closings. The Property Records Industry Association (PRIA) maintains a list of counties that allow e-recording at https://www.pria.us/i4a/pages/index.cfm?pageid=3323. Office closures should be less disruptive in these jurisdictions, and we are working with title insurers on coverage during any potential gap between disbursement and recording.
- Response to calls from policymakers for eviction and foreclosure moratoria.
- Legislation permitting remote online notarization (RON) nationwide and encouraging state legislatures to pass RON bills introduced in their legislative bodies.
- State licensing issues for employees working remotely.
Everyone at MBA remains committed to working on your behalf. MBA is in a strong position financially, despite the inevitable interruption to our conference and education events. As always, feel free to contact me with any questions or concerns. Thank you for what you do for our country every day.
Robert Broeksmit, CMB
MBA Staff Working Remotely
The MBA offices at 1919 M Street NW in Washington, D.C. are closed out of abundance of caution. MBA employees are working remotely and have full access to MBA resources to conduct their jobs and assist MBA members with everyday tasks.
About the MBA Coronavirus Resource Center
The MBA Coronavirus Resource Center has been updated and can be accessed at https://www.mba.org/news-research-and-resources/mba-coronavirus-(covid-19)-updates/mba-coronavirus-(covid-19)-resources.
This Resource Center includes information from health/disease control agencies, recommended business continuity plans, relevant information from financial regulatory agencies, as well as guidance on how companies should communicate with employees, their customers and the public.
MBA recommends members carefully review the updated Interagency Statement on Pandemic Planning issued by the FFIEC agencies in 2007 in response to the outbreak of the avian flu. While this document was developed with banks in mind, MBA believes that it can also be used as a guide for nonbank financial institutions in setting their own policies and procedures.
The Department of Health and Human Services and the Centers for Disease Control and Prevention (CDC) have developed a Business Pandemic Influenza Planning Checklist that identiﬁes important, speciﬁc activities businesses can do now to prepare in the event of an outbreak.
MBA encourages its members to work with community planners to integrate their pandemic plans into local and state planning, particularly because the industry’s operations and services are deemed to be an essential part of the nation’s critical infrastructure or key resource.